National Insurance Contributions (Increase of Thresholds) Bill

Jacob Young Excerpts

2nd reading
Thursday 24th March 2022 Commons Chamber

[Mr Clarke]

My hon. Friend is absolutely right, and we cannot emphasise that enough. We are determined to address the underlying challenges we face not only with the public finances, but crucially with the backlog of care. Let us not forget that 6 million people are on NHS waiting lists as a direct result of the covid pandemic. While we do that, we will always focus on supporting families and, crucially, on making sure that, when we do have to increase taxes, the burden is borne by those with the broadest shoulders. That is what the combination of this measure with the levy will deliver.

The Bill’s first measure will increase the NIC primary threshold and the NIC lower profits limit to £12,570 from 6 July. By way of explanation, these are the thresholds at which the employed and the self-employed, respectively, start to pay NICs. The increases in these thresholds of about £3,000 will equalise the NIC and income tax thresholds, and in so doing create a fairer and simpler tax system, something to which we ought all to aspire. That means that people will be able to earn £12,570 without paying a single penny of income tax or national insurance.

As we heard a moment ago, that is the largest increase in a starting threshold ever, it is the largest single personal tax cut in a decade, and it reduces the tax burden by £6 billion for 30 million people across the United Kingdom. On an individual level, a typical employee will see their tax bill reduced by £330 in the year from July, while the equivalent saving for a self-employed worker will be worth over £250.

[Jacob Young (Redcar) (Con)]

Does my right hon. Friend recognise the calculation by the Institute for Fiscal Studies that it is people who earn £35,000 or less who will benefit from this tax cut, and does that not show that our measures are targeted at those who need our support most?

[Mr Clarke]

Indeed, I absolutely do recognise what my hon. Friend says. The IFS has described raising the NICs threshold as

“the best way to help low and middle earners through the tax system”,

so he is absolutely right in what he says.

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[James Murray]

I know that my hon. Friend is a champion for his constituents, and in challenging the Government about the harm that their decisions will do to the people he represents.

[Jacob Young]

Let me take the hon. Gentleman back a few moments. He said that he was not debating the national insurance levy, and then he continued to debate the national insurance levy. On the subject of the national insurance levy, what would Labour do instead to fund the national health service? I have yet to see any sort of plan from the Opposition.

[James Murray]

I do not recall whether the hon. Gentleman was present in the debate on the health and social care levy, but if he was, he would have heard us set out that any increase in taxation should fall on those with the broadest shoulders, not directly on working people. This Government are laying the worst possible tax rise at the worst possible time on the shoulders of working people. In the long run, the way to fund public services sustainably is through growth, but this Government have become a low-growth Government, and therefore a high-tax Government. That is the truth of their economic model, and that is what we would seek to change.

Since September, when the Health and Social Care Levy Bill was pushed through Parliament, our arguments against April’s national insurance hike have only got stronger. The difficulties that people face in making ends meet have been mounting by the day. Inflation jumped again yesterday from 5.5% to 6.2%, with the OBR now forecasting it to hit 7.4% this year—the highest rate in 30 years. Energy bills that have been rising rapidly are set to soar next month, and the crisis in Ukraine will put even greater pressure on the cost of energy, petrol, and food. The pressure on the Chancellor to change course has been rapidly growing, yet he has backed himself into a corner. He has nailed his colours to the mast, stubbornly refusing to reconsider his deeply unfair national insurance hike, and that seems to be how we have ended up where we are today.

We have a Chancellor who has found himself politically unable to cancel his national insurance hike, yet also unable to ignore the fact that this is the worst possible tax rise at the worst possible time. That is why he has tried to respond by making these changes to national insurance thresholds, with promises of further tax cuts at some point in the future. Whatever the merits of the individual measures, that approach is driven not by what may be the right thing to help people now, but by the Chancellor’s desperate ambition to portray himself as a tax cutter, despite all evidence to the contrary.

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[James Murray]

My hon. Friend is absolutely right that there is a huge opportunity to levy a one-off windfall tax on North sea oil and gas producers’ profits. Yet there was no mention of such a tax in yesterday’s statement.

[Jacob Young]

rose—

[Gareth Davies]

rose—

[James Murray]

I am going to make some progress. The record shows that the Chancellor likes putting up taxes. He has been busily defending his tax rise on working people, but when it comes to oil and gas profits he is suddenly nowhere to be seen.

[Jacob Young]

rose—

[Sarah Atherton (Wrexham) (Con)]

rose—

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[Richard Drax (South Dorset) (Con)]

Madam Deputy Speaker, I am not used to being called first—this must be the first time. I am grateful to you, and it is a pleasure to take part in the debate. First, I refer hon. Members to my entry in the Register of Members’ Financial Interests.

I now have a chance to expand on the question that I raised with those on the Treasury Benches yesterday. When some years ago my right hon. Friend the Member for Wokingham (John Redwood) was asked at a meeting what conservatism stood for, he paused for about one second and said, “Freedom”. That is freedom for the individual, freedom from the state, freedom to spend one’s own money—or more of it—and freedom from high taxes.

As I said yesterday, I applaud the Chancellor for going as far as he did. But many of my constituents in South Dorset are impoverished already; we have deep pockets of deprivation and poverty. I fear that the generous moves by the Chancellor and the tinkering that he has done have not gone far enough.

I sympathise with the Chancellor and the Government: we have had a pandemic and now there is a war in Europe. Both have been out of the Government’s control and have clearly had devastating consequences on how we run our economy.

[Jacob Young]

Obviously, my hon. Friend will recognise that the inflation statistics paint a stark economic picture for this country, but does he also recognise that in the US inflation is double what it looks to be here? The eurozone’s inflation statistics are similar to ours. That demonstrates that this is a global problem, not one that only we are facing in the UK.

[Richard Drax]

I entirely concur. Yes, inflation is now spiralling to 7%, I think, and more across the rest of the world. Inflation has a very negative effect on the economy, on what we can afford to buy and on the value of our money. It has to be countered.

Given that the cost of living is spiralling and that taxes are the highest for 70 years, I urge the Government to go further. As they know full well, lower taxes generate more cash. That point is proven, and we Conservatives have fervently followed it for as long as I recall. Why? Again, as Treasury Benchers know, low taxes are a force for good—both for the individual, who is far better placed to decide where to spend their money, and for the private sector, which can better invest in their businesses, employ more staff and sustain a profit—an ugly word for Labour Members. Let us not forget that it is the tax from those profits that pays for the public sector.

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[Jacob Young (Redcar) (Con)]

It is a pleasure to follow the hon. Member for Gordon (Richard Thomson).

The increasingly unstable world in which we live brings many challenges to people at home, not least the many concerns of people across the country about the cost of living and the potential impact that rises in that cost can have on family living standards. Yesterday marked two years since the start of the first lockdown, the reckoning point of the first pandemic of its kind in over 100 years. Flash forward two years and we already face a new crisis, the war in Ukraine—the first full-scale war on European soil since world war two. As we heard from the hon. Member for Gordon, the fact that the tax burden is at its highest since that point shows the scale of the economic hit that we took from the coronavirus. It is in that context that we must view the Chancellor’s statement yesterday. There are no easy choices—the outlook right now is bleak, and our focus has to be on steadying the ship, on supporting the most vulnerable and on rebuilding. We are able to do this only because of the tough decisions we took preceding this crisis, and it is not worth thinking about the situation this country would be in had the Opposition won in 2019.

This Bill is an example of how we rebuild, by setting the course for lower taxes, starting with a tax cut in July for everyone earning less than £35,000—a tax cut for 70% of workers. By raising the threshold at which we all start paying national insurance from £9,500 to £12,500 in July, we are supporting over 30 million working people with a tax cut amounting to an increase in income of about £330 for the average family. That means that no individual will pay any tax at all until they earn at least £12,500—the largest increase in the starting tax threshold in British history. It means that workers up and down the country can earn £1,000 a month without having to give a single penny to the Government. This is the first step on our journey to lower taxes, in stark contrast to the Labour Opposition, who have absolutely no tax cutting plan, or any plan at all, for that matter. The shadow Chancellor recently proposed over £170 billion in uncosted spending increases as she pandered to the hard left of her party, with absolutely no plan to pay for it and absolutely no plan for how to get more money back into the pockets of hard-working people.

As my hon. Friend the Member for South Dorset (Richard Drax) pointed out, we on the Government side of the House believe that cutting taxes is in everyone’s interest, but it is only sound fiscal management that enables us to cut taxes this year, next year and beyond. This strong economy meant that last year the UK was the fastest growing nation in the G7, and unemployment levels are now back to their pre-pandemic lows, which is a remarkable achievement considering that we have just emerged from a once-in-a-century global pandemic.

Turning briefly to some of the throwaway suggestions from the Opposition, they ask why we do not just cancel the health and care levy, but they have no alternative proposals for how to fund the NHS and social care as we begin to see longer and longer waiting lists caused by the pandemic. They talk about an oil and gas windfall tax, but with no acknowledgement that it is the oil and gas sector that is delivering the future energy security we need through investment in carbon capture and storage and in hydrogen production in places such as Teesside. They talk about increasing defence spending, but with no recognition of the fact that most of them spent the period from 2015 to 2019 propping up a hard left leadership who wanted to scrap the nuclear deterrent while last year we delivered the largest ever cash increase to the defence budget since the cold war. Labour has no plans for the NHS, no plans for energy independence and no plans for defence. It has no plan at all. We on this side of the House will keep on delivering on the people’s priorities and taking the tough decisions to ensure that our economy does not just recover but becomes more resilient to the challenges we face in an uncertain world.

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[Jacob Young]

Does the hon. Lady accept this measure helps not only people who drive but hauliers, who move important products across the country, which obviously has an impact on food prices? This measure will help not only our constituents but the wider economy.

[Wendy Chamberlain]

I accept the measure helps other people, but the reality is that we have seen an increase, on average, of 40p a litre. As other hon. Members have said, there has been a 5p a litre increase in the last week. A 5p reduction is helpful, but it does not go far enough to support those who really need it.

Frankly, lowering the basic rate of income tax is the biggest wheeze of all. Paul Johnson of the IFS said in The Times this morning that we are experiencing “fiscal drag.” The freezing of income tax, which the Chancellor previously announced, means that, even as people’s wages increase, they will pay more tax, and the reduction is not happening yet. All the Chancellor has said is that he will do it at an unspecified time before the next election.

The reduction will help those on low incomes the least. It is a tiny reduction and, overall, the tax cuts announced yesterday are worth only a quarter of what is being increased. Arguably, it is not workers who benefit from the cut but people, such as landlords, with unearned income from investments. People who are wealthy enough to get their income from savings and property will pay less tax, while the least well off continue to pay more and more. This is driving another wedge between unearned and earned incomes. I tabled a further amendment with my hon. Friend the Member for Bath to require reporting on the impact.

The Chancellor repeatedly spoke about hard-working families—that was his catchphrase of choice—but those hard-working families are not being helped. They are seeing their energy bills go up and the price of food to feed their children skyrocket, and working parents are being pushed into higher tax brackets by the choice to freeze the thresholds. They pay ever more tax. My final amendment addresses unearned income.

This spring statement is a huge missed opportunity. I would have liked to see a packed Chamber debating legislation that actually makes a difference to people, but I think we would all accept that this is not that Chamber and not that Bill. There are so many steps the Government could have taken today but did not. We had an Opposition day debate at the start of this week on pensioner poverty, which we know is increasing year on year. The Minister in that debate said he was sure the Chancellor would have been listening to Opposition Members calling for more support for pensioners and suggesting some of the ways in which that could be done—you were in the Chair at the time, Madam Deputy Speaker. Clearly, the Chancellor was not listening, because pensioners were not mentioned at all yesterday. There was very little for pensioners who do not drive or own their house—or for those who do own their house but are not planning any energy-efficient home improvements.

[Wendy Chamberlain]

I thank the hon. Gentleman for putting that on the record, but we are looking at 1.3 million additional people, some of whom I am sure will be pensioners, going into absolute poverty in the next year. Our state pension is set to have a real-terms cut. Inflation is at 6.2% and is expected to go up to 8% in April, yet pensions are going up by only 3.1%. That was what the triple lock was designed to deal with; it was there to keep pensions in line with and up to the cost of living. As I have said many times in this Chamber, the state pension is not just about pensioners now; it is about ensuring that people in the longer term know that they have a state pension that they can look forward to, and that matters for younger generations, too.

This Government say that they oppose loneliness, but, as always, actions speak louder than words and the measures are leaving older people on their own, in the dark and the cold. There are very good reasons why some people cannot work. There is nothing at all for those receiving social security, who are also suffering the real-terms cut to incomes and are also struggling to pay their rent, because of the freeze to housing allowance—even the National Residential Landlords Association has called that out as being catastrophic. Frankly, it is more expensive to be poor. People on benefits are being unfairly punished by a system that is set up to make them fail. They are worrying about money, making ends meet and debts, and living in unsuitable housing that costs more to heat. These are not the conditions that set someone up to apply for jobs, to succeed in interviews or to move on to a better place in their lives. We know, as we have heard the evidence, that the benefits system can cause serious harm, damaging people’s mental health, sometimes to the extent that they take their own lives. This is not a system that helps people—often it harms them. We know that our economy is stronger when those who are able to work do so, but our system does not help people do that and it must be more compassionate. It must also receive sufficient funding so that those receiving benefits are not pushed further and further towards the edge.

Do the Government want this country to be one where destitution becomes normal? As I have said, the estimate is that 1.3 million people will move into absolute poverty as a result of the current cost of living crisis. The only support offered yesterday for those on the lowest incomes was the boost to the household support fund, via local authorities. That is no substitution for having a proper support system that stops people falling into poverty in the first place. As happens with pension credit, people do not always come forward for the support they need, so I echo the suggestion that anyone facing hardship contacts their local authority so that they can get support that may be available to them.

The Government could have cut VAT to 17.25%, which is what my party would propose to do. That measure would help everyone. Cutting VAT will shield our constituents from the worst of the increased costs, put money back in their pocket, and help those on middle and low incomes the most. With an economy that is struggling, because of a variety of factors, we need people to be out in our economy; we need people on our high streets, buying things that are made in our factories and marketed on our streets. A cut to VAT would give an immediate boost to every household, but it also helps us in the long term. That is what a meaningful policy would look like.

[Jacob Young]

I am very interested in the hon. Lady’s arguments on a VAT cut, which is something I would consider, as it is sensible. However, how would the Liberal Democrats propose paying for such a cut?

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[Alexander Stafford]

I thank the hon. Gentleman for that interesting point, but it is clear that 70% of working people are going to have a tax cut. In fact, not only is there a tax cut in the Bill, but we know that there will be an income tax cut in 2023-24. I hope the Scottish Government also reduce income tax, so that they too are on the side of hard-working people.

[Jacob Young]

Does my hon. Friend recognise, as the Chief Secretary to the Treasury did earlier, that the IFS figures show that, taking into account the health and social care levy, people who earn £35,000 or less will still see a tax cut because of the measures in the Bill?

[Alexander Stafford]

I completely agree with my hon. Friend’s point. This is a Bill that really helps people because it will reduce the amount of taxation and put more money in people’s pockets.

We need to make sure that work pays. That is vital. I mentioned the £400 billion that the Government have spent; they have kept jobs going throughout the pandemic. That is vital. It is why unemployment in Rother Valley is only 3.6%, which is below the national average. Of course, that still means that 2,000 people in my seat are actively looking for jobs, which is why last Friday I held the first ever Rother Valley jobs fair. It was a great success: there were more than 30 employers and hundreds of people turned up, and I am told that dozens of people have already got jobs out of it. That is the Conservative view on the ground in a constituency, helping with jobs, and the Government are doing that nationally.

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[Rachel Hopkins (Luton South) (Lab)]

The Chancellor’s spring statement left households and businesses across Luton South to fend for themselves in the middle of a cost of living crisis, as we are set to see this year the biggest drop in incomes on record. The Office for Budget Responsibility confirmed that real household disposable income will fall over the next two years, leading to

“the biggest fall in living standards in any single financial year since ONS records began in 1956-57”.

Britain is facing the highest tax burden in 70 years, with the Chancellor confirming £24 billion in tax rises this year. For every £6 the Chancellor has taken in tax since he became Chancellor, he is giving back just £1 today. This situation cuts to the heart of the Conservatives’ mismanagement of the economy, structured on low investment, low pay and low growth. It also shows their total disregard for the hardship that my constituents in Luton South are facing. Whether it is that people cannot afford the soaring heating bills, the petrol at the pump or the rising food prices, it is our communities that are suffering right now.

The Bill represents just one aspect of the Chancellor’s sleight-of-hand approach to the management of public finances, which is based more on feathering the nest of his own popularity—or, dare I say, his Instagram account—than it is on building an economy based on high growth, high productivity and higher redistribution. Although increasing the national insurance contributions threshold will provide some respite, it will deliver twice as much benefit to the top 50%—the top half of earners—as it will to those in the lower half. And it cannot be considered in isolation. The Chancellor announced in the 2021 autumn Budget that national insurance contributions rates would rise from 12% to 13.25%. Overall, that tax increase is regressive: those earning more than £100,000 a year could end up paying proportionately less. Notwithstanding the threshold change, the rate will be around 13.25% on most earnings up to £50,000 but just 3.25% on any income above that threshold. For all the references earlier in the debate about everyone paying their fair share, I am not sure that is the case.

[Jacob Young]

The hon. Lady mentioned the health and social care levy; does she recognise the point made earlier by my hon. Friend the Member for Grantham and Stamford (Gareth Davies)? The top 14% of earners will pay 50% of the levy. Surely that demonstrates that the levy is more progressive.

[Rachel Hopkins]

There are many ways to cut a cake. The people in my constituency know what fairness is and they know that they are paying disproportionately more in their everyday lives.

Could the Chancellor point to any other major economy that is putting up taxes on working people this April? The policies in the spring statement are poorly targeted and not grounded in fairness. According to the response from the Institute for Public Policy Research, they will help the wealthiest households four times more than they will help the poorest. Alongside the lack of support in the spring statement, wages are forecast to fall in value by 2% this year, which is equivalent to a real-terms cut of £552.

We have heard much about a parallel universe, but it is clear whose side the Conservative Government are on. They are certainly not on the side of the pensioners, families on universal credit and children living in poverty in Luton South, who face the choice of heating or eating. I wish the hon. Member for South Dorset (Richard Drax) was still in the Chamber. I listened intently to his comments about freedom; if someone cannot afford to heat their home or feed their kids, they do not have much freedom. For those on the very lowest incomes, there is nothing. There is nothing for those unable to work or those who are unemployed.

The reform places a greater level of tax on almost all workers. The Government’s negligence will lead to increased fuel poverty. Government Members may try to point, again, to the household support fund. A colleague told me earlier that for those under the income threshold, the increase would be equivalent to 6p a day.

[Jacob Young]

Will the hon. Lady give way?

[Rachel Hopkins]

One more time.

[Jacob Young]

We are talking about the second tranche of the household support fund. The first tranche of £500 million was announced last year. Luton got £1.83 million from that fund, which I am sure was helpful to her constituents. They will get a further share from the second tranche. Does the hon. Lady welcome that?

[Rachel Hopkins]

I am really pleased that the hon. Member is able to remember that figure; I hope he is also able to remind the House of the more than £100 million that has been taken away from Luton council over a decade of Tory austerity, which is why so many of the families in my constituency are living in poverty and are in fuel poverty.

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[Shaun Bailey (West Bromwich West) (Con)]

It is, actually, a pleasure to follow the considered and well thought out speech of the right hon. Member for Hayes and Harlington (John McDonnell). I agreed with some of the principal points that he made, particularly the need for this to be an ongoing discussion. We cannot allow what has been suggested today to be the full stop at the end of the sentence; we must allow the debate to carry on so that we can have those broad discussions. I share his concerns, which are also articulated in my own communities, about the plight and the difficulties that pensioners face. People on limited incomes make up a large proportion of my constituents, and also of the communities that I live in and have been brought up in.

Coming in at this point of a debate means that we have already had intensive discussion of the facts and the figures and what the OBR and the IFS have said, and I do not wish to regurgitate all the things that hon. and right hon. Members have said. None the less, we are facing an unprecedented situation. Broadly speaking, the interventions made by my right hon. Friend the Chancellor yesterday were welcome. As we have discussed, the balancing of the national insurance personal thresholds will enable, to a degree, a tax cut for hard-working people in this country. The levelling up—for want of a better expression—of those rates forms part of a broader package.

The hon. Member for Ealing North (James Murray), who is back in his place, talked about a one-off windfall tax. He strikes me as someone who will go very far on the Labour Front Bench, so I do not want to stunt his political career by agreeing with what he said. None the less, he does make an interesting point about a windfall tax. I have listened intently to the debate about this. My concern about a windfall tax, which might perhaps improve or be slightly better than what is being proposed today, is the broader unintended consequences that it might bring, such as that tax being passed on to consumers. Many many hon. and right hon. Members throughout the Chamber have picked up on that point today. We are dealing with multinational corporations, many of which have complex tax structures and people who are paid very well to avoid and to dodge tax, often using international laws. The one-off nature of what is being proposed, therefore, makes it very difficult to build a legislative framework that would operate in a way that would enable us to derive the benefit.

I do not disagree with Opposition Members about energy companies making exorbitant profits, because we see the figures. The point I come back to, though, is allowing any measure actually to be deliverable. That was a point I made when I intervened on my right hon. Friend the Chief Secretary to the Treasury at the start of the debate. It is about operational delivery—it is not just a slogan; it is about reality. It is about ensuring that people on the ground, who either derive the benefit or face the impact of what we decide in this place, can actually see that. My concern with what Labour is proposing is that, while on paper there are some interesting proposals, in reality, I question whether some of it can be delivered. My concern is the unintended consequence of my constituents bearing the brunt of increased prices as a result of those proposals.

[Jacob Young]

One of the oil and gas companies whose name is batted around the Chamber is BP. BP is investing millions of pounds in Teesside in its new carbon, capture and storage facility, Net Zero Teesside, alongside Hydrogen Teesside, which is a hydrogen production facility. Does my hon. Friend acknowledge that these are energy sources of the future, and that the investment we are seeing right now is important in building our future energy security? If we were to go down the route that Labour is proposing, it is feasible that many energy companies would pull out of their investment in green technologies of the future, which we are so desperate to see.

[Shaun Bailey]

My hon. Friend has been endowed with some form of clairvoyance today; it is almost as if has seen the second part of the point that I was about to make. He is absolutely right. We have to take a two-pronged approach. The fact is that these companies are investing, particularly in areas such as his. They are vital stakeholders in the future sustainability of energy in this country, so we cannot just take a pull-the-rug approach, or treat them completely as the bad guys. Yes, of course, exorbitant profits are being made. I acknowledged that in the first part of my speech; I am not denying that. The focus of what the Government and my right hon. Friend the Chancellor has done is to try to put the burden on those the broader shoulders, and that is the point that I am trying to drive home. My hon. Friend is right, though, that we must ensure that we encourage these organisations to continue to invest not only in the sustainability of our energy market, but in ensuring that we get the jobs and skills we need for people to realise the ambitions that we put forward in the spring statement yesterday. He is, of course, absolutely right in his intervention, and I thank him for it.

I was very pleased yesterday to see the letter sent by my right hon. Friends the Chancellor and the Business Secretary to the petroleum companies, saying that the cost benefits as a result of the fuel duty reduction—I am sure there will be chunterings and arguments that it was not enough—should be reflected on the forecourt. That was the right thing to do.

As my right hon. and learned Friend the Financial Secretary is on the Front Bench, may I also say that I welcome the Chancellor’s commitment to a value for money committee, which is being set up? I know she will respond more broadly on HMRC’s implementation of some of these NI measures, but it is vital that we ensure value for money and delivery on the ground for constituents —never more so than with the Bill we are debating today.

I should say that I am a member of the Public Accounts Committee, and value for money is our raison d’être. I am concerned that we often put things in place without thinking about how they are reflected on the ground and what value for money actually means there. For my constituents, particularly the most vulnerable, this is about ensuring, as right hon. and hon. Members have said, that they can buy their school uniform and meet the additional costs they will face as a result of where we are now.

When we talk about the changes in the NI threshold rates, I think particularly of the many sole traders and small businesspeople in my constituency who will have to navigate this change, building systems and putting them in place. It is therefore right that the Government have sought, rather than bringing in this change straight away, to delay it to July to allow that process to be embedded. I make a plea to my right hon. and learned Friend the Financial Secretary to ensure that HMRC has the systems to do that, because there have been times when I have not been impressed with HMRC and the way it has implemented such things. It is vital that the Treasury get a grip on that, to ensure that we can unleash the full benefit of what this measure is intended to do. In my very short time here, compared with many others in this place, I have learned that, whatever our political objectives and political will on particular measures, delivery on the ground can be very different and can sometimes mar them. The plea I hope she takes away from my comments is to ensure that this measure can be realised and benefit our constituents more broadly.

As I said at the start of my contribution, this is about a broader range of packages. Touching on what the right hon. Member for Hayes and Harlington said, this Bill cannot be the end of the conversation; it must be the beginning.

[Jacob Young]

Yesterday, the Chancellor published his tax plan, which sets a course for the first income tax cut in many, many years—I am not sure how many—for working people across the country. Does my hon. Friend welcome those steps, which give tax certainty to both constituents and employers?

[Shaun Bailey]

My hon. Friend is absolutely right; it is the certainty in that plan that allows us to move forward. That is the point I want to drill down on, and he has articulated it much more eruditely than me—it is obviously the fantastic focus he has, being a Teessider. Publishing a plan that sets a clear roadmap, as our right hon. Friend the Chancellor did yesterday, is vital so that we know where we are going and the fiscal interventions we will have to make to help people. That is what people are looking for.

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[Matt Western (Warwick and Leamington) (Lab)]

It is a pleasure to speak today, having been unable to get in yesterday.

Clearly, as we have heard from across the Chamber, a lot of people are hurting right now. Some might suggest that Warwick and Leamington would be deemed a relatively prosperous community, but there is real deprivation in all our communities. It is those who are on the lowest incomes, the pensioners and those on welfare, who will be—who are being—hit hardest.

While I can see the Chancellor is an ambitious individual, what was most disappointing about his statement yesterday was that, with the exception of the removal of VAT on solar panels and renewable heat systems and the 5p reduction in fuel duty, there was very little in it. That is particularly disappointing because we are in the middle of a cost of living crisis, and he could have been seen to be more obviously looking to support others. It must be difficult, being a relatively wealthy individual, to be able to see what is going on in the households of ordinary working people and the hardship that they are currently facing.

I was really surprised about the windfall tax because, to me, it seems like an open goal—an obvious thing to do. I have heard the comments of Conservative Members about the windfall tax and the need for large oil and gas companies to reinvest profits—of course, and those businesses will be doing that. Their profit forecasts were looking fairly good this past 12 months anyway, but they have risen significantly because of the dramatic rise in the international price of a barrel of oil. That is terrific for the businesses in that sector. It is fortunate for them to be there at this time, but it has significant consequences for the households of our constituents— our hard-working families who are trying to make ends meet.

We have heard the comments about those businesses having to reinvest profits, and of course they would be doing that. I sincerely want them to look at new hydrogen facilities and electric vehicle charging infrastructure, and they are, but we need to rapidly upgrade those plans, and I am sure the Government will be looking at that and talking about it in the coming days. That needs to be done, and I hope the companies and the Government will be much more ambitious than they have been to date. The upsurge in profits from the increase in the price of oil has essentially equated, as the chief exec of BP said, to a cash machine for those businesses that they have then used to increase dividends, understandably, but also to go on to a very aggressive plan of share buy-backs. That is what a lot of corporates do—I get that—but, as my Front Benchers and I have been saying, that money could have been put back in and used to alleviate the very real, very immediate pressures on households up and down the country.

The IFS says that yesterday’s announcements were really like the Chancellor giving with one hand yet taking away with the other. Paul Johnson said that the decision to raise national insurance contributions and cut income tax drives a

“further wedge between taxation of unearned income and earned income.”

That relates to my point about the dividend increases that we have seen in other parts of the economy.

[Jacob Young]

I assume that the hon. Gentleman is supporting the Bill; I think his Front Benchers have indicated that they are. He talked about lowering income tax driving a wedge and so on. Does that mean that when it comes to lowering income tax, which my right hon. Friend the Chancellor has said he wants to do in a couple of years’ time, Labour will oppose that?

[Matt Western]

Of course Chancellors want to do all sorts of things. The prospect of this Chancellor actually being able to do anything in six months, 12 months or two years is entirely down to the economic winds of that period. Let us recall that the Chancellor said just a year ago that he would allow an increase in nurses’ pay of 1%. At that time he would have been getting very regular briefings from the Bank of England forecasters, with its economists looking at what was going to happen to the economy and the rate of inflation. It was pretty clear then that inflation was already ticking up way beyond 1%, so even at the time of the announcement nurses would be getting a real-terms cut, and he then increased it to 3% in the autumn. I understand the hon. Gentleman’s point, but who knows what the economic situation will be like in two years’ time, given that the UK had the biggest hit of all G20 countries in the pandemic? These things would not have been forecasted at the end of 2019, so quite where the Chancellor will be in two years’ time, goodness only knows.

The Resolution Foundation has said that one third of the cost of living crisis has come from the increase in taxes. That is a really telling statistic. Torsten Bell said that

“it makes no sense to raise National Insurance while cutting Income Tax”.

He is quite right. There seems to be no logic to doing that. As has been said elsewhere, the increase in national insurance contributions is viewed by businesses as a tax on jobs. The Government’s determination to pursue this increase in national insurance contributions will hit hard those businesses that are already hurting as a result of the pandemic and now the war in Ukraine, as well as the consequences of the Brexit changes in certain sectors.

We have a Chancellor who has, to use the analogy of a supermarket, put up prices by six quid one month and then offered a promotion of £1 off this month—for now. I am afraid the public will see through that, particularly the poorest and most deprived in our society, including pensioners. My right hon. Friend the Member for Hayes and Harlington (John McDonnell) mentioned the removal of the triple lock, regardless of whether that will be permanent. There was nothing for the poorest and the pensioners in our society. When I went to a food bank in north Leamington a couple of weeks ago, I came across two women in their 60s—WASPI women who were queuing up, for the first time ever in their lives, to get food from a food bank. That is the reality of what is happening out there in our society.

I am afraid that there was a paucity of ambition in the measures that the Chancellor announced yesterday. He could have gone much further and done so much more for those who are hurting in our society. Sadly, I fear that that is the measure of this Chancellor.